Brexit: Three Logistics Concerns for Businesses

After the vote on 23rd June 2016, for many businesses, it seemed there was ample time to prepare for Brexit. However, the UK is now one year away from leaving the EU and naturally, many business owners are becoming increasingly concerned about its impact.

A recent study showed that 94% of UK SMEs feel that the government is failing to listen to their Brexit concerns. There are also fears that HMRC’s new customs system will not be ready by the Brexit deadline.

For businesses, it is clear that there remains a lot of uncertainty about Brexit, including what trades deals may be formed and how they will affect British businesses. This is particularly true for logistics, where these three concerns are growing.

Cost Implications

For many companies, their number one concern is cost. In order to offset, businesses facing an increase in operating and logistics costs may have to pass this onto their customers, resulting in higher product prices – this is especially worrying for logistics companies like Tuffnells. This could result in a lower sales volume, making a dent in their bottom line.

This additional spend could come from several areas, including:

Taxes and tariffs: after leaving the single market, exporting or importing goods may be subject to new charges and restrictions, which could result in higher logistics costs

Fuel: The exchange rate of the pound dropped after the Brexit vote and it could fluctuate further after the deadline, resulting in increased fuel and transport prices

Business Systems

Coming out of the EU’s single market – where British businesses currently trade tax-free – presents more issues than cost alone. This includes implementing new business systems.

While HMRC are putting their own customs systems in place, businesses also face the same challenge. Staff will require training on new tariffs and customs, logistics procedures will have to be revised, and businesses will have to find systems and methods to deal with these new processes. All of this will eat into business hours and cost companies further money.

Border Controls

The introduction of new border controls will have several affects on British businesses, including cost, delays and further administrative processes. But leaving the EU will limit companies in another way: freedom of movement.

Pre-Brexit, EU workers had the freedom to move and work in any member state, but this will no longer apply to the UK. This means hiring workers from within the EU could be more difficult, time-consuming and expensive. With many British companies hiring migrant drivers to cover the UK shortage, this could severely impact transport.

The announcement of Brexit brought about uncertainty among UK businesses. Unfortunately, only speculation is possible until all trade deals have been announced and Brexit takes effect in 2019. However, if businesses prepare in these areas, it could help to minimise impact.

ETIAS, the new permit you will need to travel to Europe from the US starting 2021

Last April the European Parliament and the European Council confirmed at the final agreement for the creation of the European Travel Information and Authorization System (ETIAS), a registration system for all visitors from third countries that are now exempt from visa. In order to strengthen border security, the European Commission proposed the creation of this system which will enter into full operation in 2021.

The ETIAS authorisation is not a visa. Once operational, it will carry out pre-travel screening for security and migration risks of travellers benefiting from visa-free access to the Schengen area. When arriving at the EU borders, travellers from the United States of America will need to have both a valid travel document and an ETIAS authorisation.

What countries will require it?

The ETIAS will facilitate access to countries within the Schengen Area to travelers from third countries that do not currently require a visa in order to improve security and to prevent irregular immigration. Therefore, to know if you need to use ETIAS or not, you will first have to find out if the country you want to visit falls within the Schengen Area, and you will also need to know if your country was visa-exempt until now.

Schengen Area Countries

It is important to remember that not all 28 countries of the European Union (EU) are part of the Schengen Area and that not all Schengen countries are part of the European Union. Great Britain and Ireland, for example, are part of the EU (Great Britain is scheduled to leave after Brexit), but not the Schengen Area; while Norway, Switzerland, Iceland and Liechtenstein are part of the Schengen Area, but not members of the EU.

Countries’ citizens who will need to apply for ETIAS.

As stated above, ETIAS will be required to travelers from countries that do not require a visa. Currently, individuals from the following 57 countries do not require Schengen visas to visit countries in the European Union. However, with the arrival of ETIAS expected in 2021, passport holders of these countries will require an ETIAS waiver to travel to Europe for the purposes of tourism, business or transit for a short 90 days stay in any 180-day period.

How is it going to work?

Prior to traveling, those interested in acquiring an ETIAS waiver must fill out an online application providing with basic information (name, age, occupation, passport number, country of entry in Europe). In addition, they must answer a few questions on safety and health issues, among others. Approval often takes minutes once your ETIAS application is complete, and the maximum amount of time for approval is only four days.

What do I need to apply?

All you need to apply is a valid Passport, a credit or debit card to pay the fee and a completed ETIAS application. Since it’s a visa waiver, you won’t need any further paperwork. And, unlike visa applications, ETIAS doesn’t require an interview at any embassy or consulate.

How do I apply?

The ETIAS application form is already available online, although its use won’t enter into force until 2021. You can apply for your ETIAS until 5 days before your trip, but the sooner you start the process, the better. Once in the application form, you’ll be prompted to provide your passport details and asked to answer a list of security questions. It’s vital that your application be error-free and that the information is an exact match to your passport. Any discrepancies between your ETIAS application and your passport could cause a delay in processing and/or approval You’ll also need a credit or debit card to complete the process.

Once you’re finished, the form is submitted immediately and you will receive an email with the information of you of approval status. You should receive the email within minutes, although sometimes issues on approval status could take up to four days to be sorted out.

How much is it going to cost?

Each applicant over 18 years old will have to pay a 5€ travel authorization fee. The payment must be done online during the application process.

How long can I use it for and when does it expire?

The ETIAS can be used for stays up to 90 days in a period of 180 days. The travel purposes covered by ETIAS are tourism, short-term business such or conference and qualifying medical procedures. Your approved ETIAS will last for three years, but it might expire sooner if your passport does. You will have to re-apply for ETIAS when you get a new passport.

For more than half a century McDonald’s has been a recognisable brand in just about every country you can think of. According to its website, the chain has restaurants in 101 countries. Its 36,000+ restaurants serve around 69 million fast food fans every single day.

With stats like this, and McDonald’s easily recognised by just about anybody, the recent EU trade mark ruling has surprised many. McDonald’s has just lost its EU trade mark for the Big Mac in what is dubbed a ‘David and Goliath’ battle with a small Irish chain.

How did McDonald’s lose its Big Mac EU trade mark?

When Supermac’s took on the might of McDonald’s in a trade mark battle, it was assumed by many that the smaller chain would lose. While Supermac’s may not be a household name in the UK, however, it’s much loved in Ireland.

Now the largest fast food chain in Ireland, Supermac’s began in 1978 and today has more than 110 franchises and restaurants all over the country. Founded by Pat and Una McDonagh, it was named after his nickname, ‘Supermac’ when he played Gaelic football. They also own Claddagh Irish Pubs & Restaurants through Supermac’s Ireland Ltd.

The EU trade mark battle

Supermac’s has been locked into an ongoing fight with McDonald’s since 2015, when it announced plans to expand into the EU and UK. McDonald’s initially objected to Supermac’s registering a number of trade marks for products and its name. They argued that the names McDonald’s and Supermac’s are too similar and would cause customer confusion. McDonald’s further argued that the Supermac’s brand name is visually too similar to their trade mark.

Supermac’s responded by pointing out that they had happily traded at the same time as McDonald’s in Ireland for more than 30 years with no signs of confusion on the part of customers.

Initially, McDonald’s won a part-victory when the European Union’s Office for Harmonisation in the Internal Market (OHIM) decided that Supermac can continue to trade in its own name within the EU. However, it rejected the Irish company’s trade mark applications for various products and menu items, saying that consumers might “be confused as to whether Supermac’s is a new version of McDonald’s”, given that there are near-identical products sold by both restaurant chains.

Revoking McDonald’s EU trade marks

In January 2019, the European Union Intellectual Property Office (EUIPO) made a decision that allows victory to Supermac’s after all. By ruling that EU trade marks owned by McDonald’s are to be revoked, Supermac’s is clear to expand into the rest of the EU.

The landmark decision went into effect immediately, on the basis that the EUIPO rules that McDonald’s had failed to prove “genuine use” of its Big Mac trade mark as a restaurant or menu item.

Unsurprisingly delighted, Pat McDonagh says: “Never mind David versus Goliath, this unique landmark decision is akin to the Connacht team winning against the All Blacks. This is the end of the McBully. Just because McDonald’s has deep pockets and we are relatively small in context, doesn’t mean we weren’t going to fight our corner.”

How the fight played out

In April 2017, Supermac’s requested that the EUIPO cancel McDonald’s trade mark for ‘Big Mac’ and ‘Mc’. The chain also accused the US giant of “trade mark bullying” by registering and gaining protection for names, but not actually using them to stamp down any potential competition.

On its part, McDonald’s legal representatives provided signed affidavits from high level executives and showed examples of packaging and adverts to demonstrate it serves Big Macs right across the EU, and therefore deserves to retain the EU trade mark for that specific product.

However, the EUIPO deemed this “insufficient” in its judgement. As trade marks are registered at national level and at the EU, McDonald’s does not lose all of its protection for the Big Mac. They also have the right to appeal, which we suspect they are likely to do.

Supermac’s forges ahead

For Supermac’s, all eyes are on the future. Mr McDonagh says: “This now opens the door for the decision to be made by the European trade mark office to allow us to use our SuperMac as a burger across Europe.”

A representative from EIP, an intellectual property law firm, Carissa-Kendall Windless, says: “This decision is a significant one, partly because it serves as a warning to multinational companies that they can no longer simply file trade mark applications without a genuine intention to use it”.

It’s inevitable that McDonald’s will exercise its right to appeal, and it will be interesting to see how this David and Goliath battle goes on this year.

About Dawn Ellmore Employment

Dawn Ellmore Employment was incorporated in 1995 and is a market leader in intellectual property and legal recruitment.

Fears of a 2019 European Economic Slowdown Loom

Although the spotlight is on the trade war between the United States and China, one aspect that is currently ignored by the media is represented by signs of weakness in the European continent.

Germany slows down

After posting a -0.3% GDP contraction in the third quarter of 2018, the economic indicators released from Germany in 2019 cannot support a positive economic picture. The manufacturing sectors continue to show signs of weakening, with the Markit PMI Composite now at 51.6, down from 52.3.

Industrial Production had been contraction by 1.9% in November, and both imports and exports had been down by 1.6% and 0.4%, respectively. DAX trading had also suggested there is growing concerns among investors and the main German stock index peaked out in July 2018, being now down by 15%.

Germany relies mostly on exports, being the third exporter in the world, only surpassed by the United States and China. That is why the weakness we see in Germany is actually a symptom of what’s happening in other European countries as well.

Italy and France not too encouraging

The new populist government in Italy, formed by La Lega and The Five Star Movement faced a serious challenge to get the EU’s approval for the 2019 budget, as the already high debt-to-GDP ratio (currently at 131.8%) raises concerns on whether the country will be able to meet its debt obligations in the future.

There are also serious concerns about the banking sector, which despite mergers and acquisitions, and huge capital available from the ECB, were unable to solve their problems which emerged after the 2008 financial crisis. The future of Italy is very uncertain, and analysts predict that the new government will not be able to meet their economic promises, given that we are at the end of a business cycle.

Speaking of France, the problems are social at the present time. President Macron was unable to stop the “Yellow Vests” protests, despite promises to increase the minimum wage and the overall standard of living for the very poor. France’s debt-to-GDP ratio currently stands at 97%, but given the latest promises, there are concerns whether the country will manage to keep the budget deficit below 3% in 2019, as the European treaties demand.

Although there’s a single currency in Europe, in terms of fiscal policy things were very fragmented, which is why the economic recovery had been very slow and the reason why investors predict Europe will face the greatest challenges to solve its economic, political, and social problems.